She recommends everyone have an emergency jar to cover unforeseen bills like a new washing machine, dentist bill, or the broken down car. Saving that pot should be a priority.
Once you’ve established that pot, you can save for short-term things like buying that new phone, Christmas, or going on vacation. Then a third jar of savings should be for medium-term goals, including home renovations, a wedding, or buying a new car.
And finally, long-term savings are all about making sure you are financially stable in the future and could allow you to save for your retirement and make investments.
Beattie recommends putting a minimum of 10 percent of your earnings in savings. It’s an achievable goal that will always help you build these pots.
What are money saving apps and how do they work?
Money saving apps work in different ways, but the main ones are apps that save money by rounding up purchases and those that automatically set aside a percentage of your income.
âWhat these apps do is they serve a need to make savings as simple as possible because they take all the hassle and all the thought process behind saving out,â Beattie said.
Apps like Plum and Chip analyze your spending and transactions to determine the best amount to set aside each week. By logging into your bank account, he is able to withdraw that amount of money each month and put it in a separate jar, which you can withdraw at any time.
You can decide whether you want the app to record a higher or lower percentage, and can ask it to stop recording at any time.
Download the Big Exchange app today
Make your money count and download the free app from the Apple Store or Google Play.
Another type of savings app, such as Moneybox, will round your purchases to the nearest pound sterling and set aside the change. This money is then invested and the app takes a 0.45% fee of the value of your investments per year as a service usage fee.
One of the simpler types of money saving apps is Squirrel, which basically deposits an expense allowance into your checking account. Once you’ve entered your salary and bank details, the app creates a bank account that separates your rent or bills so you can’t accidentally dip into them, and deposits your spending money funds into your account each time. week or every month.
Beattie cautions that there are additional risks associated with it when you start to introduce additional apps and platforms into your backup method.
When choosing a savings app, Beattie says the most important thing is to verify that it has been approved by the Financial Conduct Authority (FCA). The FCA regulates the financial services industry in the UK and can reimburse up to Â£ 85,000 per person per account in the event of a problem, such as loss or theft.
This is also why, says Beattie, you should never have more than Â£ 85,000 in a savings account.
While not specifically a money-saving app, the Big Exchange app instantly brings together all of your recent balances and transactions without needing to log into separate sites. It gives a complete picture of your personal financial world so you can set spending budgets and savings goals, and plan more easily by seeing how potential changes in your income or expenses would affect your cash flow.
Are money saving apps better than a traditional savings account?
While Moneybox could be a good introduction to investing for those who want to dip their toes in the water – “it’s a very easy way to get used to investing and watching the ups and downs of the stock market.” Beattie warned that, “The fees are high when you invest only a small portion of each money.
For those who don’t have a steady income, like the self-employed or self-employed, a savings app could help you do the math and figure out how much you should save each month based on how your income fluctuates.
But ultimately, “the best way to save is to set up a direct debit from a savings account,” Beattie said.
This is because traditional savings accounts with big banks often offer better interest rates than these apps, so if you can stick with them, you’ll save more in the long run.
If you have a reliable income, this is the easiest and most reliable way to build your savings. You may have to change the amount of money you save each month to find the right place, but if you get paid, Beattie thinks it’s the easiest way to budget.